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According to analysts at TD Securities, deteriorating global growth should further support gold prices and they are recommending to buy gold at around $1298/oz levels, targeting $1360/oz with a stop at $1270/oz, while a 3 months being the expected horizon.

Key Quotes

“The very recent jump in US 2s, a firmer USD and general optimism on the economic front have likely served as catalysts to force gold prices down to just above $1,300/oz. We also expect these same factors to pull the yellow metal to below the $1,295/oz mark in the not too distant future, which we see as strong support and a good entry point to get long. CTAs have already completed their liquidations and we estimate that these funds are unlikely to further reduce length at these levels.”

“A poor economic outlook in Europe, irrespective of idiosyncratic issues, along with continued disappointments on the Chinese economic front and slowing US growth into 2019 should all conspire to reduce risk appetite. At the same time, investors are also likely to convincingly call the end of the US tightening cycle, which should serve as a catalyst to again place gold on an upward trajectory toward $1,400/oz. But “” keep in mind that upward trends never form in a straight line.”

“CTAs will be waiting for macro participation to move prices higher before they substantially add to their length. Based on our analytics, they won’t need prices to be lifted too much from these technical support levels, as the TD Securities CTA tracking algorithm suggests that the bar for increasing systematic length is fairly low, with key upside trigger levels standing in the low $1300 range.”